Alex Hendrie

Congress Should Reject Retroactive Conservation Easement Tax Increases

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Wednesday, May 13th, 2020, 8:00 AM PERMALINK

In a letter to members of Congress, ATR urged lawmakers to reject efforts to retroactively increase taxes on taxpayers claiming the conservation easement deduction in future legislation.

While conservatives have rightly called on Congress to offset future spending proposals, this should not be an excuse for lawmakers to offset spending proposals with tax increases, especially retroactive tax increases. 

Congress has repeatedly declined to limit the conservation easement deduction in the past, so there is little justification for retroactively raising taxes now. Doing so would undermine confidence in the tax system and the legal agreements made between taxpayers and land trusts.

The full letter is below and here.

Dear Member of Congress:

As you consider proposals to mitigate the economic damage that COVID-19 has caused, I urge you to reject efforts to impose retroactive tax increases on American workers and businesses.

Many conservatives, including Republican Study Committee Chairman Mike Johnson (R-La.), have rightly called on Congress to offset new spending in future Coronavirus legislation.

While this is the right approach, it should not be an excuse for lawmakers to offset spending proposals with tax increases.

This is especially true when it comes to retroactive tax increases, which would simultaneously raise taxes on income taxed and earned in prior years and on income earned going forward.

Some lawmakers have proposed retroactively increasing taxes on taxpayers claiming the conservation easement deduction, a move with little justification that would undermine confidence in the tax system. This proposal should be rejected.

Retroactive tax policy should be rejected. The tax code relies on consistency, certainty, and fairness. Taxpayers routinely make decisions based on a reasonable interpretation of the law with the expectation that future changes to the law will not be applied looking backwards.

Retroactively changing the tax code undermines these principles by changing the rules after the fact. This can have significant financial consequences for taxpayers in the form of thousands or millions of dollars in additional tax liability from past years’ individuals or businesses.

It can also increase costs prospectively given that financial decisions would have been made based on the prior interpretation of the law.

This undermines confidence in the tax system and discourage taxpayers from taking advantage of explicit tax incentives (e.g., for charitable contributions, business investments, and energy efficiency) if they fear Congress might retroactively eliminate these incentives in the future.

What is the conservation easement deduction? The conservation easement deduction has existed for decades and incentivizes property owners to conserve land and historic sites by offering a charitable deduction. In order to claim the deduction, the taxpayer must agree to restrict their right to develop or alter the property. Organizations known as land trusts agree to monitor the restrictions placed on the property. 

In exchange for foregoing the opportunity to develop the land, the taxpayer is allowed to deduct the “fair market value” of the property, limited to 50 percent of adjusted gross income (AGI) in any given year with the ability to carry forward any unused deductions for up to 15 years.  

There is no justification for a retroactive conservation easement deduction tax increase. One proposal, S. 170, the “Charitable Conservation Easement Program Integrity Act of 2019,” would make changes to the conservation easement deduction effective to “contributions made in taxable years ending after December 23, 2016.”

This would restrict or disallow deductions from donations made as far back as January 2016 – imposing tax increases on taxpayers retroactively for tax years 2016, 2017, 2018, and 2019 and imposing tax increases prospectively.

Not only would this significantly increase taxes, it would undermine the legal agreement that taxpayers enter into with a land trust to not develop the land. Under S.170, the taxpayer would still be bound by this agreement, even though their ability to claim the tax deduction would be reduced or eliminated.

The December 23, 2016 date coincides with the release of IRS Notice 2017-10, a notice released without prior stakeholder input that subjected taxpayers to burdensome new filing requirements and onerous compliance costs. While this notice signaled the intent of the IRS to scrutinize transactions, there is no basis for it to be used as justification to narrow the deduction.

Any legislative changes to the provision are in the domain of Congress, which has repeatedly declined to limit the deduction both before and after the IRS Notice:

  • Since the 2016 notice, Congress has passed several substantive pieces of tax legislation including the Tax Cuts and Jobs Act and tax extenders legislation. In each case, Congress declined to impose limitations on the deduction.
  • There is significant legislative history affirming the intent of Congress to expand the deduction. Most recently, In 2006, the deduction was temporarily enhanced with strong bipartisan, bicameral support to allow taxpayers to deduct up to 50 percent of their adjusted gross income and carry forward any unused deductions for up to 15 years.  This enhancement was made permanent in 2015, a year before Notice 2017-10.
     

If lawmakers determine that the conservation easement deduction or any statutory provision is being used by taxpayers in a way that is inconsistent with its original intent, Congress should disallow or modify the provision on a prospective basis.

As lawmakers consider proposals to offer further relief from the economic damage caused by COVID-19, it is crucial they reject retroactive tax increases on American workers and businesses, including efforts for a retroactive conservation easement deduction tax increase.

Onward,

Grover Norquist
President, Americans for Tax Reform

Photo Credit: Peter Schultz


The New York Times is Wrong to Criticize CARES Act Business Tax Cuts

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Monday, April 27th, 2020, 2:25 PM PERMALINK

Many on the left are criticizing tax relief enacted through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. A recent New York Times article claims that corporations and “the rich” are prioritized over small businesses and individuals.

This criticism is wrong.

At issue is a provision allowing businesses to carry back losses incurred in 2018, 2019, and 2020 back five years, and a provision that expands the ability of businesses to deduct net interest expenses from 30 percent of EBITDA (earnings before interest, tax, depreciation, and amortization) to 50 percent of EBITDA for 2019 and 2020. 

These tax provisions are designed to help businesses keep their doors open so that they can continue paying workers and continue meeting routine business expenses. They are relatively minor in proportion to the overall legislation, just 6 to 7 percent of the $2.2 trillion CARES Act or $2.7 trillion after accountingfor additional $500 billion legislation enacted last week.

They are also non-controversial -- similar tax cuts have been supported and enacted into law by Nancy Pelosi, Chuck Schumer and President Obama.

Employers of all sizes have been harmed by the economic damage created by the Coronavirus. The pandemic has forced Americans into self-isolation, causing a dramatic halt in commerce.

CARES Act Business Tax Cuts Are Non-Controversial

The New York Times article criticizes several tax provisions of the CARES Act, such as the expansion of NOLs and expansion of the ability of businesses to deduct interest payments.

The article misrepresents both tax cuts while failing to mention that there is precedent for using business tax cuts to help businesses during an economic downturn. 

For instance, the article claims that the relaxed interest deductibility provision enacted in the CARES act benefits big businesses as “only companies with at least $25 million in annual receipts can qualify for that break.” What the article fails to mention is that businesses below $25 million in annual receipts have no limitation on their ability to deduct interest payments.

In addition, the New York Times ignores the fact that the Obama administration included a similar expansion of net operating losses in the 2009 stimulus package.

The legislation, the "Worker, Homeownership, and Business Assistance Act,” described the NoL expansion  as “a fiscally responsible economic kick-start,” in an Obama White House press release. As the Obama statement noted:

“The Economic Recovery Act included a provision that allowed small businesses to count their losses this year against the taxes they paid in previous years. Today, the President extended that benefit for an additional year and expanded it to medium and large businesses as well. Business losses incurred in 2008 or 2009 can now be used to recoup taxes paid in the prior five years. This provision is a fiscally responsible economic kick-start, putting $33 billion of tax cuts in the hands of businesses this year when they need it most, while enabling Treasury to recoup the majority of that funding in the coming years as these businesses regain their strength and resume paying taxes.”

The New York Times article also misrepresents the full business expensing provision enacted by the Tax Cuts and Jobs Act by implying that the provision is a loophole that somehow allows businesses to report phantom losses. As the article notes:

“For example, the 2017 law permitted companies to fully write off certain types of investments in the first year, instead of stretching those deductions over several years. That, in turn, meant companies could report profits to their shareholders but losses on their tax returns.”

However, what the provision does is allow businesses to deduct the cost of equipment and investments in the year that they are purchased. This provision encourages businesses to make new investments, which provides a value add leading to long-term economic growth, higher wages, and more jobs.

This provision also has bipartisan support – the Obama White House advocated for expensing, noting that the provision would help businesses and workers:

“If a business bought an additional $1 million worth of equipment next year, they would be able to deduct the full $1 million up front, potentially accelerating hundreds of thousands of dollars in tax cuts.  That’s real money that businesses… could use to expand or hire new workers right now, and provides a strong incentive to increase investment now, creating even more jobs.”

Business Tax Relief Is A Small Portion of the COVID-19 Response

It is also important to note that the business tax relief enacted by the CARES Act are just one part of the response to COVID-19. The provisions criticized by the New York Times total approximately $170 billion, which is roughly 6 to 7 percent of total relief provided to individuals and businesses.

One of the goals of the CARES act was to mitigate the economic damage caused by the pandemic through a combination of tax cuts, grants, and subsides provided to workers, individuals, businesses, and state and local governments. 

The business tax cuts are one part of this goal.

In all, the legislation contained approximately $2.2 trillion in aid through spending and tax reduction, while legislation enacted last week added an additional $500 billion in small business and hospital assistance.  

These bills have allocated significant funding to other priorities -- over $250 billion has been allocated to increased unemployment benefits, $350 billion in loans and grants for the Small Business Administration (which has since been increased by an additional $300 billion), $150 billion for state and local governments, $100 billion in hospitals (which has since been increased by an additional $75 billion), and $450 billion for the federal reserve to provide emergency lending.


ATR Leads Coalition In Support Of Expanding 529 Accounts

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Thursday, April 23rd, 2020, 4:00 AM PERMALINK

Americans for Tax Reform has released a coalition letter in support of expanding 529 education savings accounts as part of the COVID-19 response. 

As Americans all across the country are self-isolating, students have been forced to learn from home, a situation that has led to additional costs stemming from the need to implement online and distance learning. 

529 savings accounts allow parents to save and invest after-tax income for education costs, and are broadly popular for the middle class. As lawmakers work through proposals to mitigate the damage caused by Coronavirus, expanding 529s should be part of the solution to assist parents and students across the country. 

You can read the full letter here or below: 

Dear Leader McConnell & Leader McCarthy:

As Congress works toward future legislation to mitigate the damage caused by COVID-19, we urge you to expand 529 education savings accounts so that they can be used for expenses related to learning from home.

Because of the Coronavirus threat, Americans have been forced into self-isolation and schools have been shut down. Tens of millions of students are forced to learn from home, a situation that has led to additional costs stemming from the need to implement online and distance learning. These new costs are exacerbated by the financial hardships that Americans are experiencing across the country due to a lost job, or reduction in work hours.

Congress can help families with these new expenses by expanding 529 education savings accounts to cover expenses incurred from learning from home. These expenses can include curriculum and curricular materials, books or other instructional materials, online educational materials, tuition for tutoring or educational classes outside of the home, and educational therapies for students with disabilities.

529s are already a proven way for families to meet education expenses. These tax advantaged savings accounts allow parents to save and invest after-tax income for education costs. These accounts can currently be used to cover the cost of college and K-12 expenses including tuition, fees, books, supplies, equipment, and computers.

In addition, these accounts offer significant tax reduction. Any money earned in an account can be invested tax free and funds can be withdrawn for qualified expenses tax free. Although contributions are not federally deductible, over 30 states offer a full or partial tax deduction for 529 contributions.

Because of these benefits, 529s are extremely popular amongst middle class American families. Today, there are over 14 million 529 accounts.

There is also support for this proposal in Congress. Congressman Bryan Steil (R-Wis.) recently led a letter signed by 13 lawmakers urging House and Senate leadership to support allowing 529s to be used for home learning expenses.

As you continue working on proposals to address the damage caused by COVID-19, we urge you to support this request. Expanding 529s should be part of the solution to helping Americans get through the pandemic by providing assistance to students and families across the country.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Ryan Ellis
President, Center for a Free Economy

Jim Martin
Founder/Chairman, 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Mead Treadwell 
Former Lt. Governor, State of Alaska 
Chair, Alaska Center-Right Meeting

Marty Connors 
Alabama Center-Right Coalition Leader 

Lisa B. Nelson
CEO, ALEC Action

John Schilling
President, American Federation for Children

Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity

Kevin Waterman
Chair, Annapolis Center-Right Coalition Meeting

Jeffrey Mazzella
President, Center for Individual Freedom

Matthew Kandrach
President, Consumer Action for a Strong Economy

Olivia Grady
Senior Fellow, Center for Worker Freedom

Chuck Muth
President, Citizen Outreach (Nevada)

Andrew F. Quinlan
President, Center for Freedom and Prosperity

Timothy Head
Executive Director, Faith & Freedom Coalition

Rick Watson
Chairman, Florida Center/Right Coalition

Adam Brandon
President, FreedomWorks

Patrick Jones
Executive Director, Free California

Annette Meeks
CEO, Freedom Foundation of Minnesota

Victor Riches
President & CEO, Goldwater Institute

James Taylor
President, The Heartland Institute 

Jessica Anderson
Executive Director, Heritage Action

Carrie Lukas 
President, Independent Women’s Forum

Heather Higgins
CEO, Independent Women’s Voice

Chris Ingstad
President, Iowans for Tax Relief

Bill Mattox
Policy Director, Marshall Center for Educational Options
The James Madison Institute

Seton Motley
President, Less Government

Tim Jones
Chair, Missouri Center-Right Coalition
Fmr. Speaker, Missouri House

Ben DeGrow
Director of Education Policy, Mackinac Center

Jameson Taylor, Ph.D.
Vice President for Policy, Mississippi Center for Public Policy

Pete Sepp​​​​​​​
President, National Taxpayers Union

The Honorable BIll O’Brien
Co-chair, New Hampshire Center Right Coalition

Bette Grande
CEO & President, Roughrider Policy Center

Representative Niraj J. Antani​​​​​​​
District 42, Ohio House of Representatives

Brandon Dutcher​​​​​​​
Senior Vice President, Oklahoma Council of Public Affairs

Daniel J. Erspamer​​​​​​​
CEO, Pelican Institute for Public Policy

Mike Stenhouse​​​​​​​
CEO, Rhode Island Center for Freedom & Prosperity

Paul Gessing​​​​​​​
President, Rio Grande Foundation

Jim Bender
President, School Choice Wisconsin

Rick Larsen
President, Sutherland Institute

David Williams
President, Taxpayers Protection Alliance

Maureen Blum 
USA Workforce Coalition 
#EDTaxCredit50 Coalition

CJ Szafir
Executive Vice President, Wisconsin Institute for Law & Liberty 

Photo Credit: GotCredit


Trump Should Continue Tax And Deregulatory Reform During Pandemic Recovery

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Monday, April 20th, 2020, 12:55 PM PERMALINK

President Trump has begun taking steps to re-open the country and the economy. While the Coronavirus pandemic is far from over, the administration should be applauded for using a light-touch regulatory approach to mitigate the damage caused to the economy. 

The same deregulatory approach should be taken as we recover from the pandemic. All told, dozens of federal rules and regulations have been waived, and over 300 have been waived when state and local rules are included (A full list can be found at www.atr.org/rules)

As the country recovers from the pandemic, the Trump Administration should examine all of the regulations that have been waived to see if they are still needed and how they can be relaxed. In addition, lawmakers should work to provide more permanent middle-class tax relief as part of the Coronavirus response. 

Trump Has Waived Regulations for Healthcare and Other Essential Industries

In the healthcare space, President Trump and administration officials have taken steps to give patients and providers much-needed flexibility during the Coronavirus pandemic. For instance:

     – In recognition of the fact that millions of Americans have been forced to self-isolate, the administration has expanded telehealth services. Telehealth services are now covered for Medicare beneficiaries, meaning that at-risk seniors can receive care from their doctor through video conferencing and telephone at no additional cost.

     – The administration has taken steps to allow physicians and other medical personnel to operate across state lines in order to ensure that those who need care are able to receive it, no matter where they live.

     – The FDA has taken several steps to ease rules around testing and distribution. Rules around ventilator production have been eased to allow healthcare professionals to use ventilators intended for other environments. Similarly, rules have been relaxed around getting an existing product approved after adding an existing innovation, such as the addition of wireless and/or Bluetooth capability for remote monitoring.

     – The FDA has given states leeway to take responsibility for tests developed within their own borders, and has given manufacturers flexibility to distribute newly developed tests before the FDA grants emergency clearance.

Regulatory relief has not been limited to the healthcare space during the virus. In this time of pandemic, the administration has also offered relief from heavy handed regulations all across the government. 

For instance, the EPA has announced it will exercise enforcement discretion for businesses that are unable to follow federal environmental permits, regulations, and statutes due to the pandemic. Similarly, the Department of Transportation has provided greater flexibility over “hours of service” rules to allow relief to truck drivers transporting goods such as necessary medical supplies, testing equipment, hand sanitizer, disinfectants and food required for emergency restocking of stores.

Tax Day Delay Delivers Much-Needed Taxpayer Relief and Flexibility

The administration has even given Americans relief from Tax Day. While Americans typically file their taxes each week on April 15, the administration has delayed hundreds of deadlines to July 15 including deadlines for individuals, tax-exempt organizations, businesses, as well as payment deadlines for death tax payments.

This is welcome news that will give Americans businesses and taxpayers much needed flexibility and cash-flow.

Even so, the typical taxpayer should still file as soon as possible so that they receive their refund, which is just their money the government has held as an interest free loan.

According to IRS data, almost three in four Americans receive a tax refund averaging $3,000. Despite this, an estimated 35 million Americans – or 25 percent of total filers – wait until the last two weeks of tax season (April 1-15) to file based on prior year returns.  Given these numbers, the decision of a taxpayer to procrastinate or file and receive their refund could result in billions of dollars being re-injected to the economy or sitting on the sidelines.

Of course, the Trump administration cannot give Americans relief from Tax Day forever. However, they have already done the next best thing by dramatically reducing taxes across the board, including providing a $2,000 tax cut for the typical family of four earning $74,000 a year. 

The administration’s decision to waive and roll back regulations in the face of the pandemic has offered relief Americans families, workers, and the healthcare system.

In focusing on post-Coronavirus economic recovery, policymakers should focus on examining the regulations that have been waived and permanently repealing rules that are no longer needed. In addition to regulatory reform, further middle-class tax cuts should be passed.

Photo Credit: Gage Skidmore


Trump’s 90 Day Delay of Tariff Collection Will Help American Businesses

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Monday, April 20th, 2020, 12:53 PM PERMALINK

President Trump recently signed an executive order delaying the collection of certain tariffs for 90 days. 

The proposal, published as an interim final rule by the Treasury Department and Customs and Border Protection, gives businesses that have faced significant financial hardship the option to defer payments of duties, tariffs, and fees for 90 days.

This is a strong step toward ensuring importers and manufacturers have the liquidity they need during the Coronavirus pandemic and builds upon past actions taken by Congress and the administration to help American businesses and workers during the crisis.

However, more should be done toward providing Americans relief from tariffs. For one, this proposal is only temporary relief. While it delays payment, businesses will still eventually owe these tariffs. 

In addition, the proposal excludes billions of tariffs recently enacted under Section 201, 232, and 301. These tariffs have been imposed on almost $400 billion worth of goods in the past two years, significantly increasing costs for Americans.

These should also be delayed, or permanently repealed as part of the response to COVID-19. This would have significant economic benefits.  According to research by Trade Partnership Worldwide, suspending these will increase the U.S. economy by more than $75 billion, or 0.4% of U.S. GDP.

The fact is, tariffs are taxes. They are taxes on American consumers and American producers who use imported products. They particularly fall hard on industries that rely on imported products as an input, resulting in higher prices, leading to increased costs for consumers, lowering wages and leading to fewer jobs for American workers. 

Moving forward, trade should be promoted as it is vital to the American economy and employment – more than 20 percent, or 41 million jobs in the U.S. directly tied to trade. 

The Trump administration should be applauded for delaying collection of some tariffs. However, more should be done to suspend and repeal all tariffs moving forward.  

Photo Credit: Gage Skidmore


Intuit Aid Assist Will Help Small Businesses Apply for Pandemic Assistance

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Monday, April 13th, 2020, 1:47 PM PERMALINK

In the face of the unprecedented COVID-19 pandemic, the private sector is taking steps to help American families, workers, and small businesses through the crisis.

For instance, software company Intuit has released “Intuit Aid Assist,” a free, interactive website designed to help small businesses determine their eligibility and apply for Coronavirus loans and grants created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The CARES Act allocated funding to the Small Business Administration to administer assistance to small businesses through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) relief programs. 

Implementing these loans has been a chaotic process due to the speed at which these programs have been created, and the high demand from small businesses for assistance. However, assistance is desperately needed as small businesses across the country are struggling to meet payroll due and keep their doors open due to a loss of income stemming from the pandemic.

Intuit Aid Assist helps small business navigate through the application process by providing key information including whether they meet eligibility requirements, conditions for accepting the loan, how much of a loan may be forgiven, and an estimate of loan amounts they can expect. For businesses that are eligible, the website provides information on how to apply for a loan.

This will help small businesses get the information they need to quickly and accurately apply for assistance. This tool is also just one of many ways that businesses are stepping up to the plate during the pandemic. For instance:

  • Companies large and small are donating supplies and retrofitting facilities to produce masks, ventilators, and other medical equipment. 
     
  • Pharmaceutical companies are working at record pace to develop a Coronavirus vaccine and manufacturers already have numerous clinical trials underway to develop treatments. In the meantime, companies are providing financial support and donating supplies to patients and organizations around the world.
     
  • Health plans are also stepping up to ensure American patients don’t have to worry about paying for Coronavirus-related health expenses. 
     
  • Technology companies are making it possible for millions of workers to videoconference and work remotely, as well as providing critical support for frontline healthcare workers. 
     
  • Technology companies are also helping ordinary Americans get through this crisis by waiving late fees, providing unlimited data for users, and helping employees stay afloat with expanded compensation programs. 

Photo Credit: throgers


ATR Releases Coalition Letter Urging Waiver of SBA "Affiliation" Rule

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Tuesday, April 7th, 2020, 4:00 PM PERMALINK

ATR today released a coalition letter signed by ten organizations urging the Small Business Administration to waive the “affiliation” rules for the Paycheck Protection Program (PPP) established by the recently passed CARES Act.

If not waived, these rules will act as a direct regulatory barrier to job retention and creation at some of the most innovative and exciting companies in our economy.

As the letter notes, businesses have been impacted by COVID-19 irrespective of their ownership structure. Failing to include investor-backed businesses could threaten tens of thousands of jobs.

The SBA should waive affiliation rules in its final rule and Congress should permanently reform SBA’s affiliation rules in the next piece of legislation related to COVID-19.

The signatories also urge policymakers to reject calls to discriminate against investor-backed businesses through the PPP and the Exchange Stabilization Fund (ESF).

The full letter can be found here.

Photo Credit: Mr. Blue Mau Mau - Flickr


ATR Leads Coalition Opposed To Proposed "Buy American" Mandate

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Tuesday, April 7th, 2020, 4:00 AM PERMALINK

Americans for Tax Reform President Grover Norquist led a letter of 32 signatories in opposition to any proposal to impose “Buy American” mandates on medicines. 

If implemented, a Buy American mandate would disrupt existing supply chains, invite retaliatory actions from trading partners, and threaten timely access to medicines. In this current health crisis, such a mandate could even threaten our ability to adequately respond to the pandemic. 

See the full letter here or below: 

Dear Secretary Mnuchin, Director Kudlow, Leader McConnell & Leader McCarthy: 

 We write in opposition to any proposal to impose “Buy American” mandates on medicines.

 A Buy American mandate would place unnecessary sourcing requirements on medicines and medical inputs purchased with federal dollars. 

If implemented this proposal will disrupt existing supply chains, invite retaliatory actions from trading partners, and threaten timely access to medicines. During this unprecedented health crisis, a Buy American policy could even threaten our ability to adequately respond to the pandemic.

To be clear – increasing diversity in the supply chain should be encouraged. However, mandating production in America is the wrong way to do this.

The proposal risks upending the complex medical supply chain. This supply chain incorporates numerous inputs from across the world including raw materials, active pharmaceutical ingredients (APIs), and high precision analytical tools.

These supply chains frequently contend with a number of challenges including transportation and logistical obstacles, ensuring supply and demand are met, and alleviate stress caused to the chain due to region-specific disruptions in manufacturing or shortages. The ability of private industry to utilize a diverse global supplier base is essential to creating a healthy competitive advantage and mitigating risk.

Forcibly localizing this supply chain would be a substantial undertaking which would require finding new sourcing in the U.S. If there is no existing alternative, it would be a long process to set up an alternative.

Rather than restoring U.S. jobs, the proposal would likely lead to higher prices and reduced access. While proponents of a Buy American mandate have claimed the proposal is a way to bring back jobs to the U.S., it would almost certainly do more harm than good. 

Under a Buy American mandate, some estimates show that the costs of manufacturing could be up to five times higher

This is not unique to medicines. Buy American policies have increased prices for Americans whenever they have been tried. History shows that they restrict choices for consumers and manufacturers requiring inputs leading to higher prices or lack of access.

It is also important to note that the American pharmaceutical industry already contributes over $100 billion to the U.S. economy every year, directly supporting over 800,000 jobs. When indirect jobs are included, this innovation supports 4 million jobs and $1.1 trillion in total economic impact. 

 Pharmaceutical jobs are also high paying – the average compensation is over $126,000 – more than double the $60,000 average compensation in the U.S. Instead of destabilizing our innovation ecosystem with price controls, burdensome regulations, and heavy-handed government directives, we need to encourage advanced manufacturing capabilities with less government interference, lower taxes, and other incentives to maintain America’s global leadership in biomedical innovation.

A Buy American mandate could lead to retaliatory actions. Rather than mandating local sourcing requirements in the U.S. that could harm friendly countries and invite retaliatory actions, a better policy would be to seek the abolition of rules and requirements overseas that compel local sourcing to the disadvantage of U.S. manufacturers. Triggering a global reaction would stifle the pharmaceutical supply chain at the very moment where demand for medical innovation is most needed. Instead of warping the supply chain further, this would do more to level the playing field between regions.

We urge you to reject any Buy American policy on medicines. This protectionist proposal has no place in our healthcare system and will upend complex and efficient supply chains, leading to higher prices, threatening access to medicines, and opening the U.S. to retaliatory measures from other countries. 

Sincerely, 

Grover Norquist 
President, Americans for Tax Reform 

Jim Martin
Founder/Chairman 60 Plus Association

Saulius “Saul” Anuzis
President, 60 Plus Association

Dee Stewart
President, Americans for a Balanced Budget

Phil Kerpen
President, American Commitment

Steve Pociask
President / CEO, The American Consumer Institute

Ryan Ellis
President, Center for a Free Economy

Andrew F. Quinlan
President, Center for Freedom and Prosperity 

Jeff Mazzella
President, Center for Individual Freedom

Ginevra Joyce-Myers
Executive Director, Center for Innovation and Free Enterprise

Peter Pitts
President, Center for Medicine in the Public Interest

Gregory Conko
Senior Fellow, Competitive Enterprise Institute

Matthew Kandrach
President, Consumer Action for a Strong Economy

Fred Roeder
Health Economist/Managing Director, Consumer Choice Center

Yaël Ossowski
Deputy Director, Consumer Choice Center

Thomas Schatz
President, Council for Citizens Against Government Waste

Hance Haney
Senior Fellow, Discovery Institute

Katie McAuliffe 
Executive Director, Digital Liberty

Adam Brandon
President, FreedomWorks

George Landrith 
President, Frontiers of Freedom

Mario H. Lopez
President, Hispanic Leadership Fund

Tom Giovanetti
President, Institute for Policy Innovation

Charles Sauer
President, Market Institute

Pete Sepp​​​​​​​
President, National Taxpayers Union

Sally Pipes
President and CEO/Thomas W. Smith Fellow in Health Care Policy
Pacific Research Institute

Wayne Winegarden, Ph.D.
Sr. Fellow Business and Economics/Director, Center for Medical Economics and Innovation
Pacific Research Institute

Lorenzo Montanari 
Executive Director, Property Rights Alliance

Paul Gessing ​​​​​​​
President, Rio Grande Foundation

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

David Williams
President, Taxpayers Protection Alliance 

Sara Croom​​​​​​​
Executive Director, Trade Alliance to Promote Prosperity

Amy Noone​​​​​​​
​​​​​​​Chairman and CEO, United Seniors for America

 

Photo Credit: Marco Verch


Pelosi’s Proposed SALT Cap Repeal Would Do Nothing to Address Coronavirus Pandemic or Help Middle Class

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Tuesday, March 31st, 2020, 3:20 PM PERMALINK

In a recent interview, House Speaker Nancy Pelosi said that Democrats will push to retroactively repeal or roll back the cap on state and local taxes (SALT) in a forthcoming Coronavirus stimulus package.

Rolling back the SALT cap would do nothing to help fight the Coronavirus, nor would it do anything to help the middle class. Instead, it would expand bad tax policy that subsidizes high tax, big government states. Rather than repealing or rolling back the SALT cap, lawmakers should repeal the SALT deduction entirely as part of legislation that offers broad based tax reduction for American families. 

The 2017 Tax Cuts and Jobs Act limited the deduction for state and local taxes (including property taxes and either sales taxes or income taxes) to $10,000. 

Democrats claim this $10,000 cap raised taxes and that it erodes fairness in the tax code leading to double taxation because individuals are now paying federal taxes on income that was already subject to state and local taxes.

However, this argument is flawed. 

First, the majority of Americans are seeing tax cuts. The TCJA reduced taxes for roughly 90 percent of Americans and for taxpayers at every income level through lower rates, the expanded standard deduction, and the doubling of the child tax credit.

Second, the TCJA raised the income tax thresholds that the Alternative Minimum tax kicked in, meaning that an estimated 4.5 million families are now able to claim $10,000 in SALT deductions, which was previously disallowed by the AMT. 

Lastly, the majority of Americans were not deducting state and local taxes before the cap and are therefore unaffected by the change to the deduction.

Prior to passage of the 2017 Tax Cuts and Jobs Act, roughly 105 million American families took the standard deduction and deducted zero in state and local taxes.

This number has only increased since the Tax Cuts and Jobs Act doubled the standard deduction leading to millions more filers taking the deduction over itemizing. Today, the majority of Americans – roughly 90 percent of filers, or 135 million taxpayers, instead claim the standard deduction of $12,400 for an individual and $24,800 for married filers.  Rolling back or repealing the SALT cap will therefore do nothing to benefit the majority of filers.

Raising or repealing the SALT cap would overwhelmingly benefit wealthy, blue states. In fact, 94 percent of the benefits from repealing the SALT cap would go to taxpayers making more than $200,000 a year, according to Joint Committee on Taxation. 

Even progressive leaning groups and lawmakers have criticized proposals to raise the cap.

For instance, the left leaning Center for Budget and Policy Priorities has stated that this proposal would be “regressive and costly.” The Center for American Progress has stated that repeal of the SALT cap “should not be a top priority” as it would “overwhelmingly benefit the wealthy, not the middle class.”

In addition, Senator Michael Bennet (D-CO) recently criticized efforts to repeal the SALT cap noting that it runs counter to Democrat ideals: “We can say we’re for a progressive tax bill and for fighting inequality, or we can support the SALT deduction, but it’s really hard to do both of those things.”

Any effort to raise the SALT cap as proposed by Speaker Pelosi would do little if anything to benefit middle class families and would instead be a give away to high-tax states. This is another attempt by the left to put unrelated proposals in Coronavirus legislation and should be rejected by lawmakers.

Photo Credit: Gage Skidmore


Senate Coronavirus Bill Contains Important Tax Cuts for Individuals and Businesses

Share on Facebook
Tweet this Story
Pin this Image

Posted by Alex Hendrie on Wednesday, March 25th, 2020, 8:12 PM PERMALINK

The Senate Coronavirus emergency relief legislation, known as the “Coronavirus Aid, Relief, and Economic Security (CARES) Act”, contains numerous tax cuts that will offer individuals and businesses much needed liquidity during the pandemic.

According to the Joint Committee on Taxation, the legislation reduces taxes for businesses by $275 billion over the budget window. In all, the bill cut taxes by almost $600 billion.

These broad-based tax cuts will give businesses the flexibility to meet expenses including payroll during this unprecedented economic and health crisis. Not only will this ensure individuals continue getting paid, but the tax cuts will also give Americans flexibility over retirement accounts and charitable contributions.

Specifically, the bill:

  • Allows businesses to carryback losses incurred in 2018, 2019, and 2020 for five years.
  • Broadens the ability of businesses to deduct net interest expenses from 30 percent of EBITDA (earnings before interest, tax, depreciation, and amortization) to 50 percent of EBITDA for 2019 and 2020. 
  • Fixes the “retail glitch” so that qualified improvement property can be immediately deducted instead of depreciated over 39.5 years.
  • Allows companies to delay paying 50 percent of employer payroll taxes until 2021 and 2022.
  • Creates a 50 percent employer payroll tax credit from March 13 to the end of 2020. Credit is capped at $10,000 of wages per employee per quarter.
  • Creates an above the line charitable deduction of $300 for 2020.
  • Waives required minimum distribution rules for 2020.
  • Allows penalty free distribution of $100,000 from retirement account for coronavirus distributions.

Photo Credit: ComputerGuy - Flickr


Pages

×